Dairy giant Ekosem-Agrar joined commentators talking down
the threat of the Ukraine crisis to former Soviet Union farm operators, saying
that a weak rouble offered "more positive than negative impacts".

The Russia-based group - revealing that its dairy cow herd
had risen by 25% to 19,300 head in 2013, and its daily milk output by 38% to 370
tonnes as of year-end – said that it had "no problem with the depreciation of
the rouble".

The rouble this week hit a record low against the dollar, as
did Ukraine's hryvnia, after Russia deployed troops to Crimea, causing an
international uproar which led to the US on Thursday to impose visa bans on officials
deemed to be involved.

Many observers have cautioned over the threat to former Soviet
Union farm groups from inflation fuelled by weak currencies, making imported
materials more expensive, besides warning over the threat to exports from any
sanctions, and to Ukraine spring sowings from the country's financial
hardships.

Indeed, shares in former Soviet Union-linked agriculture
groups have fallen sharply this week.

'More positive than
negative'

However, Ekosem-Agrar said that it "does not consider the
depreciation of the rouble to pose a risk to its business".

Indeed, Wolfgang Bläsi, the group's managing director said
that "on balance, a weak rouble has more positive than negative impacts".

Major expenses, such as personnel costs, and most of the
group's debt are in roubles, while domestic milk prices are to some degree
hedged against depreciation by Russia's huge imports, the price of which are
linked to world market currencies.

"Due to the high dependence on imports, the rouble sales
price is regularly derived from the world market price, which is denominated in
euros and dollars," Ekosem-Agrar said.

Prices vs costs

Indeed, the group, which sells to the likes of Danone and
PepsiCo in Russia, said that, thanks to rouble depreciation, it had "recently"
agreed with one of its main customers a 15% increase in milk prices, in rouble
terms, to the equivalent of 47 euro cents per litre.

That is more than received by most European Union producers,
which as of December were getting an average of 34.75 euro cents per litre,
according to European Commission data.

Only Cypriot dairy farmers earning more than 47 euro cents
per litre.

The "only" negative effects for the group of the weak rouble
is on its euro-denominated liabilities, said Ekosem-Agrar, which is owned by
German-based Ekoniva Group.

"This is equivalent to the output of roughly 1m dairy cows
and an investment of E8bn," it said.

"As the number of private and small producers is on the
decline and businesses intending to build up large herds are facing high market
entry barriers, the structural undersupply will not be eliminated any time soon."